Teva: The Turning Point

In our dividend investment strategies, we generally look for high-quality companies with sustainable payouts that are being neglected or shunned by the majority of the market. This contrarian viewpoint is often misunderstood by those with a more traditional approach to the space, and it typically involves buying stocks that are susceptible to volatility given the severity of the news stories that are causing the declines in the first place. One company that currently falls into this category is Teva Pharmaceutical (NYSE:TEVA), which fell off a cliff in the month of August after the company announced a 75% reduction in its dividend payouts. This is massive news given the company's reputation as a huge dividend payer within the industry. And many investors are wondering whether or not it is even possible for the company to reverse the negative sentiment and return to prominence. Our view is that this will take time but is not outside the realm of possibility once the dust settles and investors adjust to the "new normal" that should characterize the company's operations going forward. These losses create buying opportunitiesfor new investors who can stomach potential volatility in the quarters ahead.